Archive for December 27, 2009

Thoughts on Zero Sum Behavior- Part II

December 27, 2009 10 comments

This post examines a peculiar secondary effect of zero sum thinking, namely the willingness to scapegoat groups whose contribution to scams is much less than the elites of that given society. To put it another way:

Why are whites so willing to believe that a black man or woman abusing a particular system is more deserving of punishment than a white man/ woman who has destroyed their savings, livelihood and faith in the system.

My conclusion, near the end of this post might not be palatable to some readers.

One recurring theme on the blogosphere is an idea that somehow the biggest parasites on “western” society are non-whites. However an objective look around you will demonstrate that is not the case, and I will illustrate it with specific examples.

Banksters: While bankers have always been seen as rent-seeking parasites to one degree or another throughout history, the magnitude of their effect in the post-1980 west has been on a scale unmatched in recorded human history. Banks have two roles, namely: a low-profit/ low-risk commercial banking role (loans, savings etc) and a high-profit/ high-risk investment banking role. The banksters initially used the low-profit/ low-risk part to fund their high-profit/ high-risk games. However they soon exhausted that possibility and started creating worthless financial instruments (SIVs etc) and complex insurance policies (Derivatives) to leverage a few trillion into hundreds of trillions of virtual money. When the system collapsed last year, they got their paid lackeys (our elected representatives) to bail them out with government debt issued on the faith of future increases in taxpayer receipts. The bill for that is over a few trillion and increasing as we speak (did I mention that government backing is a few times more than that sum). We are living in a world based on extend and pretend (hoping that the ‘real’ economy, which they have almost killed, will somehow resurrect itself and grow at a hitherto unmatched pace- demographics be dammed).

Some readers might point out that banks serve useful roles, to which I agree. However the system as it operates now does not serve socially useful roles because those roles are not very profitable. Virtual games, contracts and bailouts provide most of their profits . These institutions are no longer interested in the ‘real’ economy because short-term thinking, high profits and hubris enslave them to their current business model, which happens to be a virulent form of rent-seeking parasitism.

MBAs: If one particular degree is blamed for the fall of the “west”, this is it. MBA curriculums are supposed to teach people ‘universal’ management techniques, however in practice they nurture sociopaths with a focus on short-term profiteering. The whole concept of ‘universal’ management techniques is a scam for the simple reason that different sectors have unique product life cycles. What works in Burger King won’t work for Pfizer. However many people are in awe of these new priests. Events in the last year has deflated their brand somewhat, but much more needs to be done.

The focus on short-term results combined with rewarding such behavior produces perverse long term results. Would you want to develop a long term R&D program if your compensation and status was linked to your ability to outsource, adopt six-sigma or any other fashionable scam. In any case you could always desert the company you screwed over, find the next host, infect it, kill it and move on – not unlike a virus.

Some might point out the supposed efficiencies that MBAs have brought into various industries. My question is two fold: How do those ‘efficiencies’ benefit you? and How many of those ‘efficiencies’ were based on financial chincanery and three-card-monty shell games? Do the research for yourself and do not be intimidated by big words, because that is one of the ways sophists hide their bullshit.

I plan to devote a few posts in the future to highlighting the role of MBAs in creating the dystopia we live in.

The Legal Profession: The need for civil and criminal legal assistance is a social good, as it the ability to enforce contracts. The question then is: What are the majority of lawyers employed in, and where do they make the most money. The answer is: corporate law and overseeing regulatory requirements.

There is a lot I have to say about the effects of sophism and legalism on innovation (future posts), but the bigger question is: Are these expenses productive? Do they create social good or perpetuate sclerotic monopolies/ oligopolies? Who writes these laws (lawyers working for lobbyists and legislators) and for what purpose? Does spending money on untangling self-inflicted legal chicanery help with innovation or productivity? Aren’t most rules and regulations created specifically to employ more lawyers and do they not make a system sclerotic and unresponsive to new challenges?

Medical Care: Only since ww2 has going to doctors increased the chances of your survival. Previous increases in life expectancy were mainly due to better sanitation, enforcement and public health measures. However we now pay an increasingly larger amount of our money for very marginal improvements in health care. Why?

We spend much more on updating the ‘look’ of hospitals than on research to stop aging. Even then doctors are the fourth leading cause of death. Given that many are motivated into these professions by the promise of easy money, playing god and poor accountability, are you surprised? While the entrance exams and procedure to these professions try to portray an image of selecting for intelligence, they select for unimaginative, intellectually lazy sophists who can memorize well and jump through some hoops.

It certainly does not help that they indulge in anti-competitive behavior. How much do these people know anyway? Given the scandals with rofecoxib (Vioxx), olanzapine (Zyprexa), Clopidogrel (Plavix) and a host of other toxic or marginally effective drugs.. not much. How much do they really know.. consider the fanatical support for low fat diets, demonization of fat, high protein diets, misleading type 2 diabetics on the non existent efficacy of current drugs on reducing the risk of macrovascular effects.. I can go on…. Many people have noted that rare diseases are easier to diagnose with google than a specialist.. why? And how many surgical procedures have no effect on morbidity and mortality of the condition they were meant for?

I have a few other industries to trash in my next post on this topic, but my conclusion (below) remains the same.

The biggest parasites are rent-seeking privileged whites, but the average white person cannot/ does not want to accept that reality. Looking at the world in that manner would pose even more inconvenient questions about themselves, ranging from the welfare-like nature of most government generated jobs that employ them such as the defense sector, health care, home building/ selling, contractor to various levels of governments, the law and order system, jobs created by tax breaks to corporations, peculiar accounting rules etc. Furthermore many government programs that have benefitted whites such as SS, Medicare, GI Bills, post WW2 house buying programs are a form of affirmative action/welfare. People do not like looking in an undistorted mirror, for they fear what they might see.

Part III of this series has been posted here: Thoughts on Zero Sum Behavior- III

Linkfest (December 27, 2009)

December 27, 2009 Leave a comment

In other news..

What Iceberg? Just Glide to the Next Boardroom A virus infects a healthy cell, hijacks it, makes copies of itself, kills host cell and moves on to other healthy cells.

You might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies. You would, however, be wrong. Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch.

In Search of Work, but at What Cost? An article that talks about the perils and scams awaiting those who try operating their own business.

How Overhauling Derivatives Died But we have the best system money can buy.. Seriously, were you thinking that IBers would let rationality and causality derail their money-making scams?

Lobbying by Wall Street has blunted efforts to step up regulation on derivatives trading by carving out exceptions or leaving the status quo in place. Derivatives took blame for some of the worst debacles of the financial crisis. But a year after regulators and critics began calling for an overhaul in the way they are traded, some efforts have been shelved and others have been watered down.

How the status quo can kill: the example of free trade

I see more of a class divide than does Greenwald and others. Seems to me that people who have secured comfortable positions in “managerial class” and “creative class” occupations tend to support the President and an incrementalist approach to addressing the nation’s problems. They tend to be reflexively hostile to any sweeping changes, such as actually annihilating the health insurance companies, or actually doing away with the big financial houses like Goldman Sachs, Citigroup, and Morgan Chase. They seem to insist on solutions that rely as much as possible on market mechanisms, such as cap and trade to deal with climate change. They recoil in horror at the suggestion that “the system” itself is the problem. Generally, they appear to be economic neo-liberals, who have actually become acclimated to the results of the Reagan Revolution.

Another Team Obama Present to Corporate America: Health “Reform” Bill Favors Big Pharma Over Generics More change you can believe in!

Does Golden Pay for the CEOs Sink Stocks? If you reward people for playing zero sum games, they play them with more enthusiasm. The new priests (ivy leaguers) are piling in on their old benefactors. If you require a degree to say what is common sense, we are fucked!

The first study, led by corporate-governance expert Lucian Bebchuk of Harvard Law School, looked at more than 2,000 companies to see what share of the total compensation earned by the top five executives went to the CEO. The researchers call this number—which averages about 35%—the “CEO pay slice.” It turns out that the bigger the CEO’s slice of the pie, the lower the company’s future profitability and market valuation. “These CEOs,” says Prof. Bebchuk, “seem to be trying to grab more than they should.”

Put Down That Shovel! Andy Kessler cannot do math or understand the need for both “old” and “new” infrastructures. I have no hope that our corrupt system can build anything on time, on budget or withou legal wrangling due to special interest groups.

Socialized Risk, with Still Highly Leveraged Survivors Too Big To Fail! Many free market supporters still believe that CEOs, board members and other assorted MBA scum deserve their compensation.

Zack Carter on OCC Chief John Dugan in The Nation: “A Master of Disaster “

Writing in The Nation, the banking reporter for SNL Financial News describes the wreckage left behind by John Dugan, the Comptroller of the Currency and the primary regulator for most of the US banking industry. To say that Dugan is the lackey of the largest banks is really an understatement. The former lobbyist and Treasury official has been the defacto advocate for the largest dealer banks through the crisis, opposing regulatory reform initiatives on Capitol Hill and even from the FDIC, every step of the way.

“Top Ten Reasons to Kill the Senate Health Care Bill” More evidence that the PTB are still conducting business as usual, Must read!

Categories: Economy, Linkfest, MSM Idiocy